European Small & Mid Cap Survey

Micro, Small & Mid Caps represent only 22% of the market capitalisation but almost 95% of the companies that are listed in Europe. Three out of four European companies have a market cap below EUR0.5bn!

Kepler Chevreux conducted a survey with 133 institutional investors between May and July 2014. The objective was to provide our corporate and investor clients with internal benchmarks on current investment practices in this area and to illustrate our unrivalled franchise and research coverage in European Small and Mid Caps.

They focused our questionnaire on three complementary topics: 1) the current state of play; 2) trends and investor appetite for the coming months; 3) investment criteria. In this report, a wide sampling of Kepler Cheuvreux experts takes a look at our survey data based on their areas of expertise (equity fundamental research, debt & credit research, quant research, derivatives research, ECM desk, SmartConnect …).

The survey brings to light quite a few positive aspects for European Small and Mid Caps, including institutional investors’ increasing interest and confidence levels. In fact, most investors are keen to participate in IPOs and rights issues. It also confirms that the gold-standard investment criterion is by far management quality.

New governance database to profile 6000 companies

MSCI has launched a research database detailing governance metrics and rankings for more than 6,000 publicly traded companies. The new service is one of the first additions the stock index and investor tool provider has made since it took over ESG research firm GMI Ratings last month. ​

Cultivating relationships with proxy advisors

From the moment they arrived on the scene en masse after the Enron crisis, proxy advisors have been stirring up controversy. Doug Wilburne, vice president of IR at Textron in Providence, Rhode Island, believes the rise of proxy advisers has led to unintended consequences. In the interest of demonstrating diligence vis-à-vis governance issues for the companies they own, money managers have hired proxy advisers with strong views. What’s happened, Wilburne says, is that ‘investment firms are voting against a company, its management and its board when those investment firms are delighted with that company, its management and its board.’

Outgoing TB Bank CEO Ed Clark on being an investor favourite

Ed Clark has that rare ability to explain things so anyone can understand them. He’s also very likeable even while being incredibly smart and (presumably) incapable of suffering fools. In sum, the man in charge of Canada’s TD Bank Group has the characteristics of the ideal chief executive. Certainly analysts and investors think so, having awarded Clark with the best IR by a CEO (large cap) award four years in a row at the IR Magazine Award - Canada, an unparalleled run.